As someone who guides clients through every step of their real estate journey, I often get asked about the impact of interest rate cuts on housing affordability. Recent research from Canada’s central bank highlights that while lower rates quickly boost housing demand—resales start climbing almost immediately, with the full impact showing up in 18 to 24 months—new housing supply is much slower to respond. Builders typically catch up after about two years, since it takes time for planning, permits, and especially for larger projects. The research also found that strong job markets and easier lending can make buyers more confident, adding even more demand. But since supply takes time to catch up, simply lowering rates doesn’t solve affordability challenges on its own. In the long run, more homes are built, but demand always leads the way. The bottom line: monetary policy alone isn’t the cure for affordability pressures in Canada’s housing market.
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